Sleep better, sell some stocks, or buy some for Junior's future

The Ticker

March 06, 1998|By Julius Westheimer

WHAT'S new? Here are recent developments which may affect your pocketbook:

LIGHTEN UP: As a result of the long bull market, many investors are now more heavily in stocks than they originally intended to be.

"One way to find out," says Kiplinger's Personal Finance Magazine, "is to look at your portfolio allocation when 1995 began at Dow Jones 3,834.12. What was the division between stocks, bonds and cash then? Is there any reason you shouldn't revert to that breakdown of assets?"

With stocks at virtual record highs, this may be a good time to scale back on stocks and mutual funds. By selling half of big holdings you win both ways. If the sold stocks advance, you're in good shape with the half you've held. If the stocks plunge, you've escaped a total blood bath.

EASING THE BITE: "Putting money aside for the future has just gotten simpler with new laws for individual retirement accounts (IRAs) that went into effect on January 1," says the Ladies Home Journal.

The article explains that the new "Education IRA" will allow parents to put away $500 per year per child for tuition costs.

TIGHTEN BELT: Although January dividend increases topped year-earlier levels, the 1998 outlook for payouts is bleak.

"Companies are forgoing or limiting dividend hikes and instead focusing on other ways to increase shareholder value, such as buying in their own shares, etc." says the S&P Outlook.

The article adds, "Some shareholders who don't rely on dividends are still happy because their stocks are climbing, and appreciation is taxed at a lower rate than dividend income, especially after new cuts in the capital gains rate."

Comment: Many middle-age and elderly people who live on dividends alone receive few benefits from their stocks' appreciation.

MORE THAT'S NEW: (1) A new IRS ruling allows holders of 403 (b) plans to transfer plan assets, tax free, to another 403(b) plan where a wider variety of investments is available, including diversification, higher returns and improved service. See your benefits department.

(2) "You can't believe everything you hear. In December, 1996, Fed chief Alan Greenspan spoke of the market's 'irrational exuberance.' At that time the Dow was at 6,400." (Cabot Market Letter)

(3) Black & Decker Corp. is written up under "Likely Restructuring Beneficiaries," in S&P Outlook, March 4.

(4) "Many key estate planning techniques -- personal residence trusts and valuation discounts -- face a serious threat, thanks to the new White House budget proposal. See your tax person." (Dow Jones Investment Advisor)

Pub Date: 3/06/98

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